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U.S. News
Bush cautioned on Harken sale

Sunday, November 03, 2002

By Peter Behr, The Washington Post

WASHINGTON -- A week before George W. Bush's 1990 sale of stock in Harken Energy Co., the firm's outside lawyers cautioned Bush and other directors against selling shares if they had significant negative information about the company's prospects.

The sale came a few months before Harken reported significant losses, leading to an investigation by the Securities and Exchange Commission.

The June 15, 1990, letter from the Haynes and Boone law firm wasn't sent to the SEC by Bush's attorney Robert W. Jordan until Aug. 22, 1991, according to a letter by Jordan. That was one day after SEC staff members investigating the stock sale concluded there was insufficient evidence to recommend an enforcement action against Bush for insider trading.

The delay in delivering the law firm's report to the SEC -- Harken executives had previously withheld it citing attorney-client privilege -- indicates that regulators did not have a full picture of the Bush transaction when they finished their investigation, said Michael Aguirre, a securities lawyer in San Diego, who obtained the documents in the case last summer after filing a Freedom of Information request.

Dan Bartlett, White House communications director, said the timing of the letter's delivery should not have had an impact on the investigation.

"It has been made very clear that the SEC had the right to reopen the case" after August 1991, he said. "Whether it was a day after, or a week after, if career prosecutors received information that was material and relevant, it's safe to say they would follow up on it."

The Boston Globe, which reported last week on the late delivery of the law firm memo, said four former SEC officials who worked on the case did not recall receiving it. Several of those former officials did not return telephone calls about the 1991 inquiry.

Bush sold 212,140 shares of Harken on June 22, 1990, for $848,560, using the funds to pay off a bank loan that financed his investment in the Texas Rangers baseball team.

The SEC memo closing the case in August 1991 reported that Bush had been given approval to sell the shares by Harken's general counsel Larry E. Cummings and Harken's chairman Mikel D. Faulkner.

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